BIG WIND ENERGY BUYOUT

The price of the buyout? $2.7 billion. BILLION. With a B. That’s a lot of wind.

This is indicative of a new round of consolidation going on in the wind energy industry. In the last round, big corporations and investment companies bought. In the current round, utilities are buying. Think about that. The folks who invest in coal and nuclear are buying wind.

Implication: Wind energy is just about ready for prime time. Or should that be peak time?

Expanding Into Wind Energy
January 5, 2008 (Bloomberg News via NY Times)

WHO
Scottish and Southern Energy (SSE), Airtricity

Airtricity U.S. holdings. (click to enlarge)

WHAT
SSE will buy Airtricity for 1.83 billion euros ($2.7 billion) in cash.

WHEN
SSE expects the deal to be complete during first quarter 2008.

WHERE
- SSE is a British utility based in Perth, Scotland.
- Airtricity is based in Ireland and is Ireland’s biggest wind farm operator.

Airtricity holdings in the British Isles. (click to enlarge)

WHY
- The European Union policy is for all EU nations to obtain 20% of their energy from renewables by 2020.
- In addition to the purchase price, SSE will absorb 375 million euros of Airtricity debt.
- SSE will acquire: (1) 308 megawatts of operating onshore wind farms in Scotland and Ireland; (2) 187 megawatts of onshore wind farms under development in Scotland and Ireland; (3) 104 megawatts of planned onshore wind energy capacity in Scotland and Ireland; (4) 50% of a 504 megawatt offshore wind farm off Britain’s East Anglia; (5) a 288 megawatt offshore wind farm in Germany; (6) a proposed 483 megawatt proposed onshore wind farm between Biggar and Moffat in southern Scotland; (7) 1,434 megawatts of other onshore wind energy projects in the UK and Ireland in various stages of development; a participation option for a 350 megawatt offshore wind farm in Ireland; (8) 1,222 megawatts of early stage European wind energy projects in Portugal (587 megawatts) and the Netherlands (635 megawatts offshore); (9) 6,675 megawatts of wind energy development projects in China; (10) an electricity supply business w/35,000 commercial customers in Ireland.

Britain is about to expand dramatically into offshore wind and Airtricity has important holdings there, too. (click to enlarge).

QUOTES
Ian Marchant, CEO, SSE: "This agreement reinforces SSE’s position as the UK’s leading generator of electricity from renewable sources…The combination of SSE’s and Airtricity’s interests in renewable energy will provide an excellent platform for future growth, which will be made much more achievable by combining SSE’s financial strength with Airtricity’s outstanding ability in project development…In one step this acquisition moves SSE forward in onshore wind, offshore wind, Ireland, Europe and China…”